The Supreme Court of India in Parsvnath Developers Ltd. v. Mohit Khirbat (2026), delivered a landmark ruling that conclusively settled a recurring issue in Indian real estate disputes. The Court held that a builder cannot compel a homebuyer to take possession of a flat without first obtaining a valid Occupancy Certificate.
The Supreme Court ruled that offering or forcing possession in the absence of an Occupancy Certificate amounts to a deficiency in service, and a homebuyer cannot be compelled to accept such possession. The judgment strengthens consumer protection jurisprudence, underscores the statutory nature of a developer’s obligations, and restricts the enforceability of one-sided clauses commonly found in builder–buyer agreements.
Background and Facts
The case arose from three connected civil appeals filed by Parsvnath group entities against orders of the National Consumer Disputes Redressal Commission (NCDRC):
- Civil Appeal No. 5289 of 2022
- Civil Appeal No. 5290 of 2022
- Civil Appeal No. 11047 of 2025
All appeals concerned residential flats in a housing project named Parsvnath Exotica, located in Sector-53, Gurgaon.
Key factual features common to all cases:
- The homebuyers (or subsequent transferees) paid almost the entire sale consideration.
- The Flat Buyer Agreements promised possession within 36 months + 6 months’ grace period.
- Despite lapse of several years beyond the agreed timelines, construction remained incomplete, and crucially, no Occupancy Certificate was obtained.
- The builder repeatedly offered “fit-out” or “as-is-where-is” possession, without statutory approvals.
- Aggrieved buyers approached the NCDRC, alleging deficiency in service and unfair trade practice.
Orders of the NCDRC
The NCDRC allowed the consumer complaints and directed the developer to:
- Complete construction and hand over possession only after obtaining the Occupancy Certificate.
- Pay compensation by way of interest @ 8% per annum from the respective committed dates till actual delivery of possession.
- Extend contractual rebates and bear additional stamp duty arising due to delay.
- Pay litigation costs.
- Refrain from withdrawing rebates already credited in certain cases.
These directions were challenged by the developer before the Supreme Court.
Issues Before the Supreme Court
The Supreme Court framed the controversy around the following core issues:
- Whether a homebuyer can be compelled to accept possession without an Occupancy Certificate?
- Whether the NCDRC exceeded its jurisdiction by awarding interest and compensation beyond the Flat Buyer Agreement?
- Whether contractual clauses limiting compensation can override statutory consumer remedies?
- Whether delay in obtaining an Occupancy Certificate constitutes deficiency in service?
Arguments by the Developer
The developer contended that:
- The NCDRC travelled beyond Section 14 of the Consumer Protection Act, 1986.
- Clause 10(c) of the Flat Buyer Agreement fixed compensation at ₹10 per sq. ft. per month, and no higher compensation could be awarded.
- Delays were due to force majeure-like factors—financial stress, labour shortage, and delays in governmental approvals.
- In some cases, buyers had accepted possession or compensation, disentitling them to further relief.
- Increase in stamp duty should be borne by buyers as per the contract.
Arguments by the Homebuyers
The homebuyers argued that:
- Payment of nearly 100% consideration entitled them to lawful possession, not paper possession.
- Possession without an Occupancy Certificate is illegal, unsafe, and exposes buyers to municipal penalties and denial of civic amenities.
- The builder cannot rely on self-drafted, one-sided clauses to escape statutory liability.
- Delay of nearly a decade caused severe financial loss and mental harassment.
- Acceptance of possession under compulsion or necessity does not waive statutory rights.
Statutory Framework Considered
The Court examined:
Consumer Protection Act, 1986
- Section 2(1)(g) – Deficiency in service
- Section 2(1)(o) – Housing construction as service
- Sections 12, 14, and 22 – Powers of consumer fora
Municipal and town-planning laws mandate Occupancy/Completion Certificates prior to lawful occupation.
Supreme Court’s Analysis and Reasoning
1. Housing Construction Is a “Service”
Reaffirming settled law, the Court reiterated that housing construction is a service, and a delay in possession or failure to meet statutory obligations amounts to a deficiency in service.
2. Occupancy Certificate Is Not a Mere Formality
The Court held that an Occupancy Certificate:
- Certifies structural safety, habitability, and legal compliance.
- Is a statutory pre-condition for lawful possession.
- Cannot be substituted by “fit-out possession” or contractual labels.
Relying on earlier precedents, the Court observed that possession without an OC is legally invalid, and a homebuyer cannot be forced to accept it.
3. One-Sided Clauses Cannot Defeat Consumer Rights
The Court scrutinised Clause 10(c) of the Flat Buyer Agreement and noted:
- The builder charged 24% interest for buyer defaults but limited its own liability to ₹10 per sq. ft. per month.
- Such clauses are ex facie one-sided, unfair, and unconscionable.
- Consumer fora are not bound to mechanically enforce oppressive contractual terms.
4. Statutory Powers Override Contractual Restrictions
The Court emphasised that:
- The source of power of consumer fora is statutory, not contractual.
- Parties cannot contract out of statutory remedies.
- Compensation under the Consumer Protection Act includes pecuniary loss, mental agony, and harassment.
5. Delay in Obtaining OC Is Builder’s Responsibility
The Court rejected the argument that governmental delays absolve the builder, holding that:
- Regulatory compliance is part of the builder’s obligation.
- Homebuyers cannot be made to suffer for the developer’s inability to secure approvals.
- Persistent failure to obtain OC over several years constitutes a continuing deficiency in service.
Key Findings of the Supreme Court
- A homebuyer cannot be compelled to take possession without an Occupancy Certificate.
- Offering possession without an OC is illegal and constitutes deficient service.
- NCDRC acted within jurisdiction in awarding interest @ 8% per annum.
- Contractual clauses limiting compensation do not bind consumer fora if they are unfair.
- Subsequent purchasers or transferees are equally entitled to compensation.
- Acceptance of possession under compulsion does not waive the right to compensation.
Final Directions of the Court
The Supreme Court:
- Dismissed all appeals filed by the developer.
- Directed the builder to obtain the Occupancy Certificate and hand over lawful possession within six months in pending cases.
- Affirmed payment of interest @ 8% per annum till actual possession.
- Ordered adjustment of amounts already paid.
- Granted limited liberty to approach NCDRC only if OC could not be obtained for bona fide reasons not attributable to the developer.
Conclusion
The Supreme Court’s decision in Parsvnath Developers Ltd. v. Mohit Khirbat & Ors. firmly establishes that lawful possession means possession with an Occupancy Certificate. Any attempt to compel a homebuyer to accept possession without statutory approvals is not only contractually unfair but legally impermissible.
The judgment marks a decisive reaffirmation of homebuyers’ rights and clearly signals that completion of construction alone is insufficient. Developers are legally bound to ensure that homes are fit for lawful occupation before offering possession.
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